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Snoopy throws out the ceremonial first pitch while Charlie Brown looks on prior to a New York Mets game in 2009.

Henny Ray Abrams/The Canadian Press

DHX Media Ltd. is selling almost half of its stake in the Peanuts franchise to pay down debt, as the company struggles to reverse its fortunes amid an ongoing “strategic review.”

One year after making lovable loser Charlie Brown the globally recognizable face of the company, Halifax-based DHX is selling 49 per cent of its interest in Peanuts Worldwide LLC to a division of Sony Corp. for $237-million in cash.

In May, 2017, DHX aquired majority ownership of the Peanuts and Strawberry Shortcake brands in a US$345-million deal that significantly increased its revenue, but also its debt load.

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Other strategic options, including an outright sale of the company, are still being explored, DHX chief executive Michael Donovan said on an earnings call on Monday morning.

But any goodwill the Sony deal may have generated with investors was overshadowed by a quarterly financial performance that fell well short of expectations, adding to a string of disappointing operating results.

In its fiscal third quarter, DHX not only reported an unexpected loss of 5.5 cents per share, the company also said it might have to suspend its dividend, it likely won’t meet this year’s financial targets and it will stop the practice of providing guidance on expected performance.

“Dropping guidance is almost always seen as a negative,” said Peter Hodson, founder of 5i Research Inc. “Either it’s bad, or they just don’t know, which is also bad. It’s a pretty big mess.”

Investors reacted forcefully to the news, dragging DHX shares down by 21 per cent on the day to close at $3.37. Since peaking at about $10 a share more than three years ago, the stock has now declined by nearly 65 per cent.

The bulk of those losses have come over the past eight months. Last September, the company reported a net loss so far below forecasts that then-CEO Dana Landry apologized to shareholders.

Rather than issues with the company’s content, the blame largely fell to management for lack of execution.

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“We’ve always believed the library has pretty significant value,” Mr. Hodson said. “They just haven’t been able to monetize it as they should have.”

In February, a management shakeup saw Mr. Donovan, the company’s co-founder, return to lead DHX through a strategic review, which began last October and has dragged on for seven months now.

On Monday, Mr. Donovan said all options remain on the table.

“Deleveraging is a priority, and that could include asset sales or it could include almost anything. It could include revenue license deals going forward, it could include restructuring, it could include the sale of the company,” Mr. Donovan said in an interview.

And the more the stock slides, the more attractive the company could become to potential acquirers, Mr. Hodson said. “The cheaper it is, the more interesting it gets,” as a takeout candidate.

The company’s level of debt, however, has been a key concern for shareholders. To finance the acquisition of an 80-per-cent stake in the Peanuts franchise, DHX nearly tripled its long-term debt to about $750-million after the deal closed last June.

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The cash from the Sony deal will help shore up DHX’s balance sheet. “We achieved our key objective with this agreement to de-lever while maintaining majority control of Peanuts,” Mr. Donovan said.

Sony also brings to the partnership expertise in marketing Peanuts in Asia, having acquired the brand’s Japanese rights in 2010.

“Sony’s done a masterful job of managing the brand in that territory,” DHX president Josh Scherba said. “We do believe the success that has been achieved in Japan is exportable to other markets.”

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